By Jake Velie, CPT
Founder, Chairman & CEO, National Integrative Health

Publication date: October 29, 2026

Every self-funded renewal comes down to one question from the stop-loss underwriter: how much of next year’s risk can be seen, measured, and priced? When high-cost drug spend is unmanaged, the honest answer is “not much.” The carrier then protects itself the only way it can, with higher specific rates, higher deductibles, lasers, or exclusions.

This article looks at that problem from the underwriter’s side of the table, and explains how National Integrative Health (NIH) works with stop-loss carriers and actuarial partners to make high-cost Rx risk something they can price.

The problem underwriters are pricing

High-cost claims are no longer rare events for a self-funded plan. Sun Life reports that million-dollar-plus claims are up 46% since 2022.¹ Its prior analysis found that 88% of employers experienced at least one stop-loss claim in a given benefit year between 2020 and 2023.² Tokio Marine HCC reports that claims exceeding specific deductibles by at least $2 million rose 213% between policy years 2020 and 2025, and expects a tightening rate environment through at least 2027.³

Drugs are a major part of that tail. In the 2025 IFEBP medical stop-loss premium survey, specialty pharmacy was cited in 47% of catastrophic claims, and 49% of plans reported claims above $1 million, up from 23% the year before.⁴ Sun Life identified Keytruda as the highest-cost drug in its book, with $84.4 million in spend.⁵ Cell and gene therapies add a different kind of risk: claims remain infrequent, but a single treatment can exceed $2 million to $3 million.⁴ ⁶

The result is visible at renewal. Single-year stop-loss increases ran roughly 8.8% to 10% in 2025.⁴ Amwins’ Stealth reports that 29% of its groups had at least one lasered individual in 2025.⁷ Lockton notes that clients increased deductibles at nearly twice the 2024 rate to manage premium.⁸

Why unmanaged Rx is hard to underwrite

From a clinical and actuarial standpoint, four features make high-cost drug spend difficult to price.

1. Variability in unit cost. The same infused drug can be billed at very different rates depending on where it is given. A hospital outpatient department, a physician office, an ambulatory infusion center, and the home can each produce a different allowed amount for the same J-code and dose. If site of care is not managed, the underwriter must assume the most expensive setting.

2. Split visibility between medical and pharmacy. Specialty drugs move between the pharmacy benefit and the medical benefit. When those claims are administered separately, no single party sees the full drug picture for a member. Underwriters receive partial data and price the gap.

3. Forward risk that history does not show. New therapies enter the market quickly and do not appear in prior claims experience. Lockton points out that past claims experience may not reflect the impact of future catastrophic cases, which pushes carriers toward forward-looking assumptions.⁸ A carrier that cannot see how a plan will handle a new high-cost therapy will load for it.

4. Waste built into the medication order. Many infused drugs are dosed by weight or body surface area and supplied in single-dose vials. When an order uses the wrong combination of vial sizes, the plan pays for drug that is opened and then discarded. A 2016 study in The BMJ estimated that payers spend about $1.8 billion a year on discarded amounts of the top 20 cancer drugs sold in single-dose vials alone.⁹ Medicare billing guidance already expects billed units to match the smallest combination of vials that delivers the prescribed dose.¹⁰ If no one audits the order, the underwriter has to assume that waste is part of the cost.

Each of these features adds uncertainty. Uncertainty becomes margin in the renewal quote.

What “underwritable” means

An underwritable Rx strategy is one that a carrier and its actuaries can model with confidence. In practice, that requires:

• Defined clinical pathways. Prior authorization, dose verification, an audit of the vial combination on each order, and appropriateness review based on published clinical criteria, applied the same way every time.
• Managed site of care. A documented process for moving clinically eligible patients to lower-cost, clinically appropriate settings.
• Consistent acquisition cost. Drug pricing tied to transparent, predictable benchmarks rather than facility chargemaster rates.
• Integrated claim data. Pharmacy and medical drug claims reviewed together, so the carrier sees one view of each high-cost member.
• Early notice of large claimants. Identification of high-cost members as soon as therapy is started, not after the claim has crossed the specific deductible.
• A repeatable record. The same results year over year, so the actuary can give credibility to the plan’s own experience.

When these elements are in place, the underwriter has fewer unknowns. Fewer unknowns support more stable pricing, fewer lasers, and better access to terms such as no-new-laser and rate caps.

How NIH works with carriers and actuaries

NIH operates an integrated fiduciary pharmacy program for high-cost medications. Our work with stop-loss carriers and actuarial partners follows the same six principles listed above.

Clinical pathways, applied by pharmacists. Our clinical team reviews high-cost therapies for appropriateness, dose, and duration before and during treatment, using published clinical criteria. The same review is applied every time, which gives the carrier a known control at the point where cost is decided.

Our pharmacists also audit each medication order against the prescribed dose. Orders are often written with a combination of vials that does not account for waste. When that happens, we change the order to match the treatment more precisely. The patient receives the same drug at the same dose, and the treatment does not change in any way. The only difference is that the plan stops paying for drug that is thrown away. In many cases, this step alone saves the plan significant money.

Site-of-care management. We coordinate with prescribers and patients to place infusions in the safest, most cost-effective setting the patient’s condition allows. Each move is documented. Patient safety and continuity of care come first.

Predictable acquisition cost. We source high-cost medications at the lowest available net cost, with pricing tied to transparent benchmarks rather than facility chargemaster rates. For individual high-cost members, NIH can arrange single-case agreements. For groups, enterprise agreements set predictable terms across the population. Both give the underwriter a defined cost for risk that would otherwise be open-ended.

Medical and pharmacy integration. We look at medical-side drug claims, including infusions, injectables, biosimilars, and J- and Q-code billing, together with pharmacy claims. Carriers and actuaries receive one consistent picture of each member’s drug therapy.

Early notice of large claimants. Because we review high-cost therapies at the start of treatment, we can identify large claimants before they reach the specific deductible. We share that information with the carrier and provide drug-level detail in a format actuaries can apply to their models.

A record the actuary can credit. We apply the same clinical, site-of-care, and pricing controls year over year and report the results consistently. We work with the broker, TPA, carrier, and actuary ahead of each renewal window, so the plan’s own experience can carry more weight in pricing. Our goal is to answer the underwriter’s questions before renewal, not during it.

What this means for brokers, TPAs, and employers

For mid-market groups, often in the 500 to 1,000-life range, one high-cost member can change the renewal. These groups have the least room to absorb a laser or a large rate increase.

Three practical steps help:

1. Start before the renewal. Identify current and expected high-cost drug members 120 to 180 days before renewal.
2. Put the controls in writing. Carriers price what they can document. Clinical criteria, site-of-care rules, and pricing terms should be written and shared.
3. Bring the carrier in early. Share the Rx strategy with the stop-loss underwriter as part of the submission, not as an appeal after the quote arrives.

Conclusion

Stop-loss carriers are not opposed to high-cost drug risk. They are opposed to risk they cannot measure. Plans that manage high-cost Rx with clear clinical controls, integrated data, and predictable pricing give underwriters and actuaries what they need to price fairly.

That is the work NIH does. If your group is approaching renewal with high-cost drug exposure, we can review the risk with you, your broker, and your carrier before the quote is set.

Footnotes

1. Sun Life, “2026 High-Cost Claims and Injectable Drug Trends Report.” https://view.ceros.com/sun-life/high-cost-claims-and-injectable-drugs-report
2. Risk & Insurance, “Million-Dollar Medical Claims Soar, Putting Employers Under Pressure.” https://riskandinsurance.com/million-dollar-medical-claims-soar-putting-employers-under-pressure/
3. Risk & Insurance, “Medical Stop Loss Claims Above $2 Million Have Tripled Since 2020” (Tokio Marine HCC – A&H 2026 Annual Market Report). https://riskandinsurance.com/medical-stop-loss-claims-above-2-million-have-tripled-since-2020/
4. International Foundation of Employee Benefit Plans, “2025 Medical Stop-Loss Premium Survey for Self-Funded Plans.” https://blog.ifebp.org/2025-medical-stop-loss-premium-survey-for-self-funded-plans/
5. Sun Life / SLC Management, “Cancer still tops high-cost health claims but muscle and orthopedic conditions are making surprise surge.” https://www.slcmanagement.com/us/en/newsroom/news-releases/announcement/cancer-still-tops-high-cost-health-claims-but-muscle-and-orthopedic-conditions-are-making-surprise-surge-sun-life-report/123968/
6. Midwest Business Group on Health, “SpecialtyRx Toolkit: Financial Impact and Cost Management of Cell and Gene Therapies.” https://mbgh.org/specialtyrxtoolkit/cgt/cost-mgt
7. Amwins / Stealth Partner Group, “Stop Loss State of the Market Report 2025.” https://www.amwins.com/docs/default-source/external-linked-documents/stealth-docs/stealth_sotm_2025.pdf?sfvrsn=8eb1bdc2_2
8. Lockton, “Medical Stop Loss – People Solutions Market Update, Q3 2025.” https://insights.lockton.com/people-solutions-market-update/q3-2025/medical-stop-loss
9. Bach PB, Conti RM, Muller RJ, Schnorr GC, Saltz LB. “Overspending driven by oversized single dose vials of cancer drugs.” BMJ 2016;352:i788. https://www.bmj.com/content/352/bmj.i788
10. Noridian Healthcare Solutions (Medicare Administrative Contractor), “Drug Wastage – JW and JZ Modifiers.” https://med.noridianmedicare.com/web/jfb/topics/drugs-biologicals-injections/drug-wastage-jw-and-jz-modifiers
11. Centers for Medicare & Medicaid Services, “Discarded Drugs and Biologicals – JW Modifier and JZ Modifier Policy FAQs.” https://www.cms.gov/medicare/medicare-fee-for-service-payment/hospitaloutpatientpps/downloads/jw-modifier-faqs.pdf
12. Self-Insurance Institute of America, “High-Cost Drug Market Update” (2025 High-Cost Drug Forum). https://www.siia.org/files/2025/High-Cost Drug Forum/2)__High-Cost_Drug_Market_Update.pdf